Tyler Ash: October 28, 2013: Is There a Link Between Happiness and Productivity?

The theory that employee happiness leads to higher performance both individually and organizationally first was hypothesized during the Human Resources Movement in the 1930s. I believe that there is a positive correlation between these two variables, even though it may not explain all performance. I am taking this side because in my own life I perform much better when I am happy overall and I also observed that I become tired and lazy if I am not in a good mood. Since there is a correlation, there are a few ways employers might be able to implement practices in order to make their employees happier. The main ways the employer could increase the happiness in the work place is to give benefits that don’t cost money like giving flexible work hours, not constantly looking over their shoulder to reduce stress, and giving up some power to employees to show that they are valuable and influential in the success of the company. Employers shouldn’t just try to make their workers happy for profit because happy workers can also make a bosses’ job easier. A very important tool for employers to use to improve attitudes in the work place is free training classes to improve their value to themselves and the company. This has been a generally accepted idea but surprisingly the evidence from numerous studies is conflicting. The four viewpoints of this relationship are: 1. Satisfaction causes performance; 2. Performance cause satisfaction; 3. The satisfaction-performance relationship is linked by many other variables; 4. Both stem from an unknown variable. One study by Quinn in 1988 predicts that worker well-being may lead to reduced performance while another by Loveman in 1998 suggests the polar opposite. I have seen various studies that range the relationship from a negative .3 correlation all the way up to a positive .44 correlation. With that large of a range there is definitely some kind of variable missing in some studies that is being overlooked or variables that are very inconsistent. Many studies predict that any association seen is due to uncontrolled third party variables such as emotional exhaustion and on job demand. Another major problem that these types of studies run into is exactly how to determine levels of performance or productivity when it comes to customer service jobs and not just manufacturing or labor. The three most well-known meta-analysis’ were by Vroom(1964), Petty McGee and Cavender(1984), and finally Iaffaldano and Muchinsky. These three examined job satisfaction as it relates to performance and all of them came up with very small and barely significant conclusions. This is how researchers knew that there was more than just job satisfaction making an impact. In these customer service jobs, performance should not be how much money the employee makes for the company, but rather the number of satisfied customers after dealing with a particular employee. By making the customers happy they will spread the word and build the company’s reputation which eventually will lead to more money, just not right away. I believe this third party variable that is missing in many of the studies is the happiness of the worker outside of work and in their everyday home lives. The reason I think this is that a person could be very satisfied with their job but may have family issues at home which could greatly impact a person’s happiness. Job satisfaction and overall happiness in my opinion both work together in order to improve or deplete performance. I do not think that one of these variables is solely responsible for performance variances at work because if a person doesn’t like their job they could perform worse, but they could be happy at home. There is quite a bit of significant evidence that points towards happy workers being more productive, but the amount of variance explained by it is still relatively low. This means that there is still many more connections to make to find all the variables that explain a worker’s job performance.

The first study I examined was written by T.W. Taris and P.J.G. Schreurs who wanted to see if employee satisfaction/happiness is directly related to productivity in the business of caretaking for people with disabilities or limitations. It particularly pertains to organizational performance which they say “is not simply the sum of all individual performances”. They examined 66 home care companies and got back about a 50 percent response rate totaling just under 57,000 fully finished and returned surveys by employees and about 55,000 client surveys. In order to try to minimize the effect of emotional exhaustion on employee satisfaction, they ran both results in regards to performance. This hopefully helps mediate the results and leads to more accurate information. From research of many other studies, it was clear that the well-being of an employee depended on three different variable which are job demands, job control, and social support. The highest amount of well-being comes from the combination of low demands, high control, and high social support. Because this study was done on the home care industry the surveys were filled out by almost entirely women on the employee side which could have some impact on the results or correlations, but the other studies I included study both genders. The range of education of those surveyed goes from just having a high school diploma to have college degrees for people who are in management. The three different surveys that had to be handed out were to the employees, their clients, and each company’s financial records over the course of the year the study took place (2004). After running the regressions, some very surprising evidence arose. The strongest relationship that was found was a negative one with productivity. I think this relationship comes from the desire of the employees to give the clients extra attention because they really enjoy their work and care about their clients. There was very little correlation with efficiency and a strong statistical significance relationship with employee satisfaction and client satisfaction which was expected because it was in the service industry. Another conclusion that was brought to light is that emotional exhaustion had many negative effects especially on client satisfaction and productivity. Even though there is a negative correlation to productivity, I think it gets offset by how satisfied the clients are because happy clients will recommend that business where they are treated better. In the end, this should boost overall market share and make the company more money even though the productivity for that worker may not be as high. Word of mouth and reputation are very important factors to look at for the long run success of any organization.

The next study I dove into added another new measure to further and hopefully more accurately predict the amount of happiness a person actually has. Psychological well-being could be the key to a more accurate depiction of employee’s happiness. This takes the well-being and emotional state of a person outside of work along with job satisfaction. One of the best aspects of psychological well-being is that it can measure both positive and negative emotion at the same time. Psychological well-being is a variable where the gender of the participant should be clarified because sometimes there is more or less consistency in the data. Happiness should be a better predictor than job satisfaction as they relate to job performance because it is a broad self-evaluation that a person gives on their overall emotional state in and out of the work place. Some large studies have found that psychological well-being could be the mediator between job satisfaction and performance. In a lab experiment, Fredrickson discovered that positive feelings actually allow the brain to broaden its temporary thinking while negative feelings narrowed this scope. This idea makes people consider if positive people are actually higher performers because of their mindset and not just their abilities. Another interesting statistic is that people who are psychologically well off are usually extroverted, outgoing, and tend to stay away from risks more than those who are negative. I was caught off guard and had

to read that a couple times because I did not think that the positive people would take less risk on than those with a negative attitude. People who are happy also are much more proactive in their lives, which transfer over to their work while negative people are more likely to do the bare minimum. Fredrickson found that positive people have a much higher desire to broaden and build themselves to further succeed. There is also a lot of evidence from previous studies that state that positive feeling greatly enhance a person’s ability to problem solve, make decisions, and process events at a fast rate accurately. Middle managers were used for this study consisting of mostly white males. The hypothesis of this study is that psychological well-being will moderate the relationship of job satisfaction and job performance. After getting the results back from the survey, there was a significant relationship at the 99 percent confidence level between both job satisfaction and psychological well-being as they relate to job performance. The relationship between psychological well-being was larger than job satisfaction’s relationship with performance. Job satisfaction and job performance had a standard deviation of below one while psychological well-being had a deviation of one point five. This shows me that employee’s attitude varies far more than either other variable. Job satisfaction and happiness are also significantly related, but nowhere near as related to job performance. In conclusion, both variables make an impact, but more of the variance is explained by psychological well-being. This article did a great job effectively connecting the relationship of these variables to job performance while making sure the two had minimal interference with each other so the performance relationship could be evaluated. A good way to watch out for employee well-being is having psychological based interventions, as well as making sure that each person is in the correct position. If they don’t enjoy their position their job satisfaction and psychological well-being will both decrease.

The third article written by Zelenski, Murphy, and Jenkins takes a slightly different approach by having employees take surveys over a period of time so they could answer two questions: 1. Do happier people tend to be more productive? 2. Are people more productive on days that they are happier? This approach is very intriguing because a person’s performance isn’t always the same day in and day out. The survey are taken by middle management employees who give themselves their own performance rating based on their perception of how well they are completing their job. This is a possible limitation of the study but it is still very difficult to rate the performance of managers so self-evaluations are probably more effective. Life satisfaction and work-life quality were two of the measures used in this study to predict happiness. The two dimensions used for predicting productivity were work quality and quantity. By taking results over an eight week period, they are able to find evidence of whether people have changing productivity day-to-day based on their level of happiness and not just relative to other employees. In this article the happiness constructs are combined to make the measure “positive affect”. Emotional exhaustion was included, but there was no significant effect on negative affect or performance. The results for the relationship between employees showed that positive affect and quality of work-life are correlated at the 99 percent confidence level while job and life satisfaction were correlated at the 95 percent confidence level. These findings do not surprise me but do demonstrate that quality of work-life has more influence on performance than the other variables. The next set of results that show the relationships within an employee over time as their attitudes and life changes. Positive affect, job satisfaction, and quality of work-life were all significantly related to productivity at the 99 percent confidence level while life satisfaction had no significant relationship. The positive affect measure ended up being able to predict 17 percent of the variation in job performance between subjects which is a great finding,

but what about the other 83 percent? The amount of happiness contributed by job satisfaction and life satisfaction towards performance was surprisingly similar. I first thought that life satisfaction would have a much larger impact on a person’s overall happiness. When it came to the study with-in each individual the positive affect measure predicted 15 percent of the performance by that employee’s day-to-day overall happiness. These numbers are showing me that performance is much more accurately related to overall happiness both at work and in life, not one or the other. Once again, the major issue I had with this study is that the managers rate their own performance so on days they were feeling happier they may have rated themselves better even if their performance might have been the same. Positive affect includes many measures to accurately depict happiness and the evidence showing its positive impact on performance is compelling. This article really shows the importance of taking life satisfaction into the equation of work performance.

The next study takes a younger demographic to find out if happy students are better students academically. This takes leisure satisfaction, family satisfaction, university satisfaction, and housing satisfaction all into consideration when predicting overall life satisfaction (happiness). In previous studies, these four constructs explain over 50 percent of life satisfaction. As one would think, the satisfaction of a person’s leisure time was negatively significantly correlated to grade point average. Counter intuitively, overall life satisfaction was not significantly related to GPA which I think stems from college students not being as mature as those who are working full-time jobs for their livelihood. There are also so many extra distractions in college versus in the normal work place, especially since there is not a boss watching you to make sure you go to class or finish all your homework. The only two variables that were significantly related to life satisfaction were leisure and family satisfaction, with leisure having the largest impact but negatively. IQ had by far the largest impact on GPA which makes sense. A useful fact is that even though there weren’t direct significant connections made between happiness and performance, there was a significant difference between students with higher life satisfaction and lower satisfaction. The students with relatively higher satisfaction actually did have better performance in the managerial workshops when comparing student to student. The workshops consisted of two twenty minute leadership group sessions, a three minute persuasive speech, and completed an exercise simulating a top level manager. A problem with this study is that even though all of those surveyed were business students, their class schedules can vary greatly in regards to difficulty and number of credits. Also the amount of hours that they work should have been considered with the amount of credits. Somehow, this study should have included total hours of work (school and job) per week so those that are in the same range in this category could be examined. This article was good because it gave me a different perspective other than manager performance.

The last study by Jones tries to further understand the impact of life satisfaction and job satisfaction and which one relates more to performance. In one of the studies that Jones quoted life satisfaction and job satisfaction were both related to each other, but life satisfaction explained considerably more variation in job satisfaction than vice versa. The theory that predicts that satisfaction is related to performance is from the Adam’s equity theory which states that the employee will give equal to what they receive (assumes most people are matchers). Judge and Hulin said, “to spend a majority of one’s waking hours at a dissatisfying job appears to have a significant influence on the overall well-being in one’s life.” There were over 250 people surveyed, about one fourth of whom were in night-time masters programs and also working at the time. Surveys were also given to every participant’s supervisor so their

performance could be accurately recorded. When all said and done 95 pairs of surveys were successfully completed by both worker and supervisor. The study covers a very wide range of occupations from construction to banking which is a first compared to the other studies. The scales used to determine life satisfaction were a depression/happiness scale and also an overall life satisfaction scale. The results showed that that the life satisfaction construct was very consistent with a coefficient rating of .86. If all the variables are included, the overall reliability factor was .89 so the results could be accurately analyzed. In this study it was discovered once again that life satisfaction is a far better predictor of performance rather than job satisfaction. Job satisfaction was not positively related to in-role performance, organizational citizenship behavior, or combined performance. Life satisfaction on the other hand was significantly related to all three with combined performance having the strongest correlation even at the 99 percent confidence level. This evidence is extremely compelling and makes it more apparent that overall happiness and life satisfaction has the largest impact on how an employee will perform. I also thought I would point out that the employees that were happier also had higher organizational citizenship behavior which can improve the overall atmosphere and moral in the work place. This can make employees happier and cause a ripple effect.

After reading and analyzing many studies I really believe that worker happiness has a significant positive impact on job performance. On the other hand, I think the evidence of job satisfaction impacting performance really depends on the type of job and where the business is located. I say the location matters because in different studies about countries in the Middle East and Asia, this correlation was all over the place. Even though there isn’t conclusive evidence about job satisfaction impacting performance it often relates to customer satisfaction which has indirect positive effect on any company. If the employer sees slightly lower performance and higher customer satisfaction, they should consider the effect of these happy customers. The relationship of job satisfaction impacting overall life satisfaction should ring in employer’s heads because what happens at work does affect the rest of that person’s life. This result makes me think that job satisfaction is one of the mediators between happiness and performance. Employers need to try to improve the overall well-being of their workers and they will get better attitudes as well as higher performance. These articles also disproved many older studies that used to claim there is a direct connection between job satisfaction and performance when the real connection had to do with happiness in life all together which includes job satisfaction to a certain extent. When students were the subject there was absolutely no correlation because of the severe lack of supervision like people have in a work environment. Even though there was no significant correlation, there was a slightly higher grade point average for those with more overall life satisfaction. Overall well-being and the satisfaction of a person at work and everywhere else can have fairly large statistically significant implications on work quality and quantity. Happy employees are in fact productive employees.